Dear FutureMoneyTrends.com Member,
One essay can’t cover the amount of scams available to speculators, but here are the top 3 that I think all of us can say we’ve fallen for at least once. It’s important to not ever fall for these wealth stealers, or as G.W. Bush said, “fool me once, shame on you… (awkward pause)… fool me, you can’t get fooled again.”
Pump and Dumps
Now, there is nothing inherently wrong with buying micro-cap stocks. We should know; we’ve made a lot of money from them in this very letter. There is also nothing deceptive about a company wanting to market their stock. Everyone from Coca Cola to new start-ups need to do this. In fact, I would argue that if a company doesn’t market their business to investors, then don’t buy it. Avoid it. A great example is a company like Scorpio Gold, a small gold producer who doesn’t believe in marketing. Since their high in 2011, they are down 86%, even underperforming the TSX-Venture exchange. This has been a disaster for shareholders, and I personally blame management refusing to spend a dime on marketing. A similar company who believes in marketing like SilverCrest Mines is only down 33% during the same time period. To add insult to injury for the Scorpio Gold investors, they are trapped like rats on a sinking ship. With no marketing, the stock isn’t liquid. So not only do you have to watch the decline, but you can’t even get out of the stock if you wanted to.
The scam we all need to avoid, though, is not whether to buy good companies who have a marketing team or not. It’s to avoid bad companies – empty shells, zombie stocks who have ridiculously great marketing teams, oftentimes funded by the seed investors of the company.
To avoid these scams, a good place to start is in the disclaimers. If you read below that the publisher was paid millions of dollars by a 3rd-party shareholder, then the odds are good that the entire marketing campaign is a liquidation. Because whoever is writing that multi-million dollar check isn’t writing it to build a shareholder base, they are writing it so they can sell their shares to you. Unfortunately, when the marketing stops, the stocks usually collapse to their intrinsic value of zero.
Looking at the business itself is also a good indicator. Is it 6 months old with a PO Box and a website, or does the business have something real behind it? A quick search on the people who manage the company can also help you find out if they have had success in previous ventures, and also if they’ve been associated with any pump and dumps in the past.
Mutual Funds
Written in greater detail here, this industry has been sucking money out of the middle class for decades.
There are over 18 hidden fees, in addition to the 1-3% sticker price.
The worst part for investors is that 96% of them over a 10-year period don’t even beat the S&P 500! I’ve always laughed at their names, “aggressive growth fund” or “value growth fund.” I mean who wouldn’t want to put their money in something with those names? The reality is being 100% in paper assets is not real diversification. Instead, you are just helping transfer more money from your pocket to the mutual fund industry, which provides little to no value.
Don’t ask your broker about this, by the way. Unless he is a fiduciary, he or she is likely paid by the mutual funds themselves to push these horrible investments to their clients.
I don’t own even one of these. I avoid them completely, and there really isn’t a reason any of you should own them. If you want diversification in a fund, then just buy a Vanguard index fund, where fees are 1/10th of your average mutual fund and have a 96% chance of beating a managed fund over the course of a decade.
Retirement
If you’re 65 today, there’s a good chance you are either dead or still working. Unless you had a government job, then you may indeed be retired.
This idea of retirement is all wrong, in my opinion, and may even qualify as a huge scam orchestrated by the big money changers on Wall Street.
Retiring, first and foremost, is an admission that you haven’t been enjoying what you do for 40 hours a week for the past 3 to 4 decades of your life. Let’s all think about this, because you only have about 112 hours a week where you aren’t sleeping, so if you really do spend 40 hours a week not enjoying your life, that’s depressing.
Secondly, to lose active income is a mistake, and oftentimes leads to a quick death. Maybe not from the loss of income, but the purpose of waking up: your self-value and utility to the world. Work, in my opinion, is healthy.
Lastly, the entire way Americans save for retirement is insane. Saving up a large next egg, almost completely dependent on speculation, maxing out a 401k and praying the market goes up. If one were to truly spend 4 decades focused on income generation, passive and active, then the need for some large lump sum that you can withdraw off of would be obsolete. And by the way, if you spent time building up your cash flow, I would bet that you could live the retired life at a much younger age.
Retirement is sold as you doing all the things you’ve ever wanted when your body is less-agile, sex drive may be all but broken, and your children are all grown up doing their own thing.
Instead of even thinking about retirement, I would strongly suggest you do whatever it takes to scrub this idea out of your mindset.
Choose your own way. Create your own path. Build up a cash flow machine, and do everything you want to do in retirement right now. Travel, take afternoon naps. and pour out your heart and soul into this life, because you only get one shot at this.
New Stock Suggestion Coming
Our staff is currently monitoring a new IPO that should be tradable very soon. When it does become public, you will be the first to know. I expect this small stock to become an instant success, and will likely help us double or triple our money in 2015. Look for further details in the next 10 days.
Best Regards,
Daniel Ameduri
